Hard-hit NHS Trusts Share £178m Rescue Package

More than 12 of the most financially troubled NHS hospital trusts in England will today share in a £178m rescue package being put together by Patricia Hewitt, the health secretary, to avoid bankruptcies across the health service.

She will announce a change in NHS accounting rules to allow the bale-out. The Treasury has accepted her plans to scrap a system that reduces the income of loss-making hospitals at the same time as penalising them if they could not make a profit to pay back earlier losses.

During a Guardian investigation in December, data provided under the Freedom of Information Act showed 103 hospital trusts across England were forecasting an accumulated deficit of £1.6bn by the end of the financial year, caused by overspending since 2001. At least a dozen hospitals had reached the point where financial recovery was impossible.

David Nicholson, the NHS chief executive, admitted the system was “unsustainable and inconsistent”. But he said the Department of Health could not afford to deal with the problem at that stage.

Mr Nicholson is expected to say today that economies across the NHS during the winter months, including laying off staff and delaying operations, made a solution possible. He will tell health authorities to release £178m from a contingency fund to provide extra income for the hospitals most seriously affected by the “double-whammy” accountancy trap.

More than £250m will also be dispersed to primary care trusts whose budgets were raided to create the contingency when the NHS was heading into financial deficit last year. They will get the money before the end of the financial year, with no opportunity to spend it before the end of March.

The department said: “The latest forecast showed that the NHS as a whole was on track to deliver a surplus of £13m, compared with a deficit of £547m last year.”